Labor standards

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labor;
Principle 5: the effective abolition of child labor; and
Principle 6: the elimination of discrimination in respect of employment and occupation.

Commitment, principles & goals

Our entrepreneurial approach as a conscientious, responsible company includes ethical conduct as well as a commitment to human rights and core international labor standards.

The Human Rights Charter listed under Principles 1 and 2 is the primary policy document on compliance with core labor standards within Merck KGaA, Darmstadt, Germany.

At Merck KGaA, Darmstadt, Germany, respecting our employees’ dignity, treating them fairly and in compliance with laws and regulations is a matter of course. As a matter of principle, we are guided by the ILO Core Labor Standards. We adhere especially to this claim with respect to the following topics and regularly audit our sites against these requirements: Freedom of association, no forced labor, no child labor, non-discrimination and equal opportunity, wages and salaries, working hours, occupational health and safety, prevention of abuse and harassment

The Group-wide EHS Policy  (Principles and Strategies for Health, Safety and the Environment), which came into effect back in 1995, is the governing document with regard to the topic of occupational health and safety. This policy is implemented at site level through internal EHS standards that apply Group-wide as well as through guidelines and directives on compliant behavior. The contents of our guidelines are based on the Responsible Care Global Charter , which was instituted by the international chemicals industry. A major goal is the reduction of workplace accidents to an annual LTIR (lost time injury rate) of 2.5 by 2015. We have already reduced this to below the target level for the third time since 2011.

We believe that workforce diversity promotes innovation and better team performance. A good balance between different cultures, nationalities, and age groups as well as between male and female employees is conducive to our entrepreneurial success. We have therefore set ourselves the goal of furthering workforce diversity and including all employees in company operations in the best possible way (workforce inclusion). Increasing the proportion of women in management positions is important to us. We have thus set the target of increasing the percentage of women in management positions (global grade 14+ according to the Global Grading System as per Towers Watson ) to 25%-30% by 2016.

Implementation

• Raw materials tracking and education program: Mica is a raw material we use for one of our pigment product groups. When examining the mica supply chain, we discovered in 2008 that at the start of the supply chain, mica is partly also collected by children, generally together with their parents. This is not compatible with our corporate values and the principles of our Human Rights Charter. Consequently, we have realigned the mica supply chain in order to prevent child labor and to ensure that the principles of our Human Rights Charter are complied with.
  
  It was important to us to maintain our business relationships with suppliers in the regions where mica comes from and thus safeguard jobs in Jharkhand, a region in northeast India plagued by poverty and political uncertainty. Today we procure mica exclusively from mining and not from collecting. Based on information provided by our suppliers, we have introduced a system for tracking the origin of the raw material. It is regularly checked by staff from the office we recently set up in the region. We maintain regular and close contact with our business partners in Jharkhand and have informed them in detail about our values and our expectations regarding the social and environmental standards to be complied with. In addition, we conduct and commission audits at our suppliers and upstream processing partners.
  
  In addition to changing our mica procurement process, we are working to improve education and health care programs in the regions where the raw material comes from. For this purpose, we are financing three schools with an affiliated daycare center, which are now regularly attended by around 430 children, as well as a training center for tailoring and carpentry. We are improving medical care by means of a local health center. A doctor and a nurse are on daily duty, regularly visiting the surrounding villages and our schools. In addition, we support an Indian non-governmental organization with a project for developing "children-friendly villages". This aims to improve the understanding of children's rights and the general conditions for children to regularly attend school.
• EHS management: Workplace health and safety at Merck KGaA, Darmstadt, Germany, is an integral part of our Environmental, Health & Safety (EHS) management. Bernd Reckmann, a Merck KGaA, Darmstadt, Germany, Executive Board member, bears ultimate responsibility for environmental, health, and safety matters. The Group function Environment Health Safety Security Quality (EQ) is responsible Group-wide for overseeing these topics, and the operational units at the Merck KGaA, Darmstadt, Germany, sites are in charge of implementing measures.
  
  Employees and supervisors are further sensitized to potential accident risks and hazards through training seminars and other activities such as competitions. In addition to this, our safety culture is further reinforced by rewarding good performance at individual sites (such as the Safety Excellence Award for zero workplace accidents) and through best practice sharing at regional EHS forums. We apply our Operation Excellence Program in order to continuously improve EHS performance at the production sites.
  
  Throughout Merck KGaA, Darmstadt, Germany, we also implement preventive occupational health and safety measures for our employees. Ergonomic evaluation of the workplace is one of the tasks of our central EHS Management organization. Other measures are managed and implemented locally. These include fitness activities, information on healthy nutrition, and early detection of diseases such as diabetes or cancer.
• Diversity Management: In 2011, we created the position of Chief Diversity Officer (CDO) in order to promote employee diversity. In addition to this, a Diversity Council was formed with representatives from all divisions and functions. This council further develops diversity strategies, promotes their implementation and assesses their progress. In order to foster diversity and inclusion within the company, we engage in numerous activities both Group-wide and at a local level. These include communication measures and special advanced training on topics such as leadership skills and self-marketing. Diversity and inclusion at Merck KGaA, Darmstadt, Germany, is also furthered by internal networks initiated by our employees, such as the International Community and Women at Merck KGaA, Darmstadt, Germany, each of which represents the interests of a different group.
  
  In 2013, we developed a new competency model describing the type of conduct that supports our strategic alignment and fosters business success. The types of behavior represented in the six competencies promote diversity and inclusion within the company; they are the basis for our recruitment, assessment, performance, and learning offerings. In 2013, we started several pilots. In 2014, the model will be applied at every stage of people management.

Gauging the results

In order to monitor and assess adherence to the Human Rights Charter both within Merck KGaA, Darmstadt, Germany, as well as at our suppliers, we conduct the audits mentioned under Principles 1 and 2; we have furthermore implemented a speak-up line for employees to report compliance violations. In addition to this, we annually gather key figures and publish them in our Corporate Responsibility Report.

• EHS audits and data management: Workplace health and safety is an important task of Environment, Health & Safety (EHS) management. Regular EHS audits are conducted within Merck KGaA, Darmstadt, Germany, to assess compliance with local requirements, regulatory requirements, standards, and business requirements.
  
  Data on workplace health and safety are gathered on a monthly basis, evaluated and published on our intranet. In 2013, the lost time injury rate (LTIR – the number of workplace accidents resulting in missed work per 1 million man-hours) was 2.2. No workplace deaths were recorded. The internal Safety Excellence Award, which recognizes sites with no workplace accidents, was presented to 38 sites within Merck KGaA, Darmstadt, Germany.
• Workforce diversity: In 2013, 25% of the management positions at Merck KGaA, Darmstadt, Germany, were held by women, thereby reaching our strategic goal of boosting this percentage to 25% to 30%. We intend to increase this percentage even further by 2016. Fiscal 2013 was the first time that a woman was appointed as head of a Merck KGaA, Darmstadt, Germany, Group division. People from a total of 114 different nations work at Merck KGaA, Darmstadt, Germany. Only 27% of Merck KGaA, Darmstadt, Germany, employees are German citizens, and 72% work outside of Germany.
• Audits of the mica supply chain: An audit system, including unannounced audits by Merck KGaA, Darmstadt, Germany and third parties as well as regular visits by Merck KGaA, Darmstadt, Germany employees, has been developed to ensure that the mica-mines and processors are socially compliant. We also check that they adhere to our requirements regarding environmental protection, safety, working standards and compliance. In 2013, six audits were conducted by an external provider in addition to the regular visits. Identified deficiencies have been documented in audit reports, and corrective measures aimed at improving these deficits are being implemented.